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Advantages and disadvantages of buying a house young instead of renting?
I m a recent college grad currently halfway through a Master s program. I ve also just started working at a great job, full time, and I love it so far. I still live at home with my family (because it makes more financial sense...instead of paying rent somewhere else, I live home rent free but pick up my share of the bills to help my family).
However, when I finish my grad program, my goal is to move out and get my own place. My mom wants to sell our house by that point as well. I ve always wanted to live in a nice, newer development or re-purposed loft or apartment downtown (my job is close to downtown as well) in my city. However, there s been big economic growth recently and rents have sky-rocketed downtown and developing neighborhoods around the area and have ballooned to as much as $2k/month for a one bedroom, one bath. (I have friends doing this right now and it sounds ridiculous to me.) But the houses in the surrounding neighborhood haven t had yet experienced this sort of growth in prices. There s 4 bedroom, 3 bathroom houses for sale that range from $60k-$250k in neighborhoods that are doing fairly well right now.
I ll be 25, 26 upon completion of my degree and there s not a single part of me that would want to live long term in another city (travel, yes. But nothing longterm as all of my family is here). Would it be more advantageous to consider buying property at a younger age instead of renting?
5 Answers
- shipwreckLv 76 years agoFavorite Answer
Wait until your employment is steady long term, once you are settled into a job first rent one or two places. This rental time will allow you to gather stuff for your first home. A home requires an tremendous amount of stuff, at least a Uhaul truck full just for indoors. A house also requires a shed full of stuff and a garage full of stuff. Having an apartment full of stuff when you move to a house means you only need new outdoor stuff.
You could go directly to buying a 4 bedroom house but you won't even furnish all the rooms and buy all the window coverings the first year and the heat and air conditioning bills will surprise you. You could rent out rooms to your friends until you lose all your friends and learn how to evict or become a long term landlord learning some hard lessons,
Mean while your career may require a couple of moves maybe away farther than a commute until you get your career stable.
- ?Lv 76 years ago
The transaction costs in buying and selling a house are high. Maintaining a house is expensive. When the roof leaks, you don't call the landlord. You are the landlord.
I have a very hard time believing that one bedroom apartments are 2k a month (24k for a one-year lease) when houses nearby are 60k. I suspect that there is something you are missing. Housing prices are cyclical, so if you have found the neighborhood that is about to go up in value, then you'll do well. If house prices are overheated like rents are in your city, then you might take a capital loss when you sell.
You need a 20% down payment, so start saving. And have a some extra because you're going to have to pay for stuff. Moving. Furniture. Towels. Towel racks. A washing machine and dryer. A new fridge when the old one gives out.
- ?Lv 76 years ago
It probably would be advantageous to buy a house instead of renting. Normally, as you acquire equity in a home, the value of that home rises constantly and you both live in it and acquire wealth from it simultaneously.
However, there are situations in which the housing market completely collapses as it did around 2007 and 2008. In such a situation, your equity in the house might not make up for the property taxes, waste water fees and other expenses of ownership you have incurred. If you are able to ride out such a low point in the value of houses, this usually won't matter that much but no one can be completely sure about what the future will bring.
All that can be said is that home ownership is usually a good long-term investment.
- sophiebLv 76 years ago
you should be paying rent to yur parents for living ther.
I'd say for you to work at that higher paying job for a few years before buying a house. Average home cost here is $120K, you'd need 20% down, closing costs, etc. and a realtor and lawyer, and money for maintenance. Be sure you've paid off your car and student loans prior to getting into a house. In this poor economy (which has been since the mortgage foreclosure fiasco of 2008) has people struggling to get work so keep the job you get and maybe even get another part time job as well.
As a young person it's best not to get held down by a house just in case you have to move for work.
- MichelleLv 66 years ago
The one disadvantage of being a young, single person who lives in suburbia is that you will not be surrounded by your peers. This means you are going to have to drive into the city for most activities.
Also consider that owning a house is work. When a married couple does it, they share the burden. So time you would otherwise spend socializing, you'll be cutting grass, painting decks, etc. You also have to factor in your commute, as you very likely will be spending 2-3x more time going to and from work.